Power grid on alert as outage at Yallourn coal-fired power station to last weeks

A maintenance mishap will result in one of Yallourn’s coal-fired plants being out of action for two weeks during one of the most volatile periods for demand.

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Victoria’s power grid is on heightened alert after an unexpected outage at the state’s second-largest coal-fired power station sidelined an important source of supply, exacerbating the propensity for prices to spike if temperatures drop.

EnergyAustralia, which owns the Yallourn power station in the Latrobe Valley, has confirmed one of the plant’s four units is down and will remain offline for at least two weeks after a maintenance mishap that resulted in an air duct collapsing inside the facility.

The mechanical failure occurred in the early hours of Sunday while Unit 3 was undergoing scheduled maintenance.

No injuries were reported, and WorkSafe Victoria has been notified.

The incident has taken a quarter of the plant’s generation capacity offline during one of the most volatile periods for demand – the early weeks of winter – and could force Victoria to lean more heavily on gas-fired generation if temperatures plunge.

“It will be a weather watch for the next couple of weeks,” one senior energy executive said. “There is ample gas in storage, so there are no concerns about insufficient capacity. But it is unhelpful for wholesale prices.”

Yallourn typically supplies about 20 per cent of Victoria’s electricity demand. The outage, though temporary, underscores the fragility of the state’s ageing coal fleet and the market’s continued reliance on thermal power during periods of peak demand.

EnergyAustralia said it is investigating the incident and inspecting similar equipment across the facility.

The coal-fired power station at Yallourn in Gippsland that has been hit by an unexpected outage. Picture: Andrew Henshaw/NCA NewsWire

“At approximately 1am on Sunday June 8, an air duct on Unit 3 of the Yallourn power station detached from the boiler end and fell to the basement floor while the unit was offline for maintenance. No one was injured,” a company spokesman said in a statement.

“We are taking this matter extremely seriously. EnergyAustralia’s priority is to ensure our people remain safe.”

While the outage is not expected to lead to blackout warnings that trigger market intervention, it is likely to increase reliance on gas-fired generation, which can be a more expensive source of electricity compared with coal or renewables. The shift could push up wholesale electricity prices, which are a key input in setting household and business tariffs.

The incident comes after other unplanned outages across Australia’s ageing coal fleet, raising questions about the viability of keeping these assets running until replacement renewable and firming infrastructure is fully in place.

Yallourn is one of the oldest coal plants in the country and is due to close in 2028.

In recent years, EnergyAustralia has spent hundreds of millions of dollars on maintenance to keep it operational until its scheduled retirement. The company did not comment on whether the incident could affect those plans.

Outages at AGL’s Bayswater plant and Origin’s Eraring facility last year – both in NSW – triggered similar volatility in wholesale markets. Those outages coincided with a heatwave, which pushed electricity demand higher and contributed to a jump in retail tariffs. From July 1, NSW households are expected to see power bills rise by up to 9 per cent.

Despite the current outage, the energy market enters winter in better shape than in previous years. Gas storage levels at Iona, a crucial facility in southwest Victoria that supplies Victoria and NSW, are near-record highs for this time of year.

Still, the Yallourn incident serves as a reminder of the risks posed by ageing thermal infrastructure as Australia’s energy system undergoes a complex and costly transformation.

Originally published as Power grid on alert as outage at Yallourn coal-fired power station to last weeks